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NARM's Jim Donio On Today's Music Business: 'It's Not For The Faint of Heart'

The association's president also talks about honoring 'American Idol' at this week's convention: "It's bigger than 'All in the Family,' 'The Cosby Show' and 'Gunsmoke.' "

The 2011 NARM convention kicked off at the Hyatt Century City on Monday, drawing an estimated 1,000 registrants to its lineup of panels, performances and networking opportunities galore. Over the years, the confab of the National Association of Recording Merchandisers has boasted early appearances by the likes of Taylor Swift (in 2007) and Mariah Carey in 1990, which happens to be the last time NARM was held in Los Angeles.

So to what does L.A. owe this honor? American Idol, for one, which NARM President Jim Donio (a huge fan of the show) will lead in honoring at a dinner this Thursday night. Topping the bill: Idol Season 7 winner David Cook, along with performances by Matt Nathanson and Tyrese Gibson. Awards will also be presented to Nicki Minaj (Breakthrough Artist of the Year), Brian Wilson (Chairman’s Award For Sustained Creative Achievement) Annie Lennox (Harry Chapin Humanitarian Award) and Kenneth Gamble & Leon Huff (Outstanding Achievement Award for Musical Collaboration).

The Hollywood Reporter caught up with the New Jersey-based Donio on the eve of the convention.

The Hollywood Reporter: First, let us commend NARM on its choice of headliner David Cook. He’s an American Idol alum whose debut sold well over a million copies, yet he’s not always featured on the short list of Idol’s marquee names.

Jim Donio: Yet, isn't "Time of My Life" the best-selling coronation song of all-time? And I think he has the most tracks to chart on iTunes simultaneously following his win. So, absolutely, he has sold well. I think David Cook is a really good fit for our audience, and the timing works really well since his second album is about to come out. NARM isn’t a public event, but we love to have artists showcase new music that they want the industry to hear.

THR: Idol as a sales force is also impressive, moving more than 50 million albums and 160 million song downloads, yet people seem to focus on the flops.

Donio: I agree with what Jennifer Lopez said in her pre-judging debut: are we looking at the glass half-full or half-empty in terms of how many huge successes there have been? I think the track record is laudable. Obviously, it's not going to be a home run every single year. I look at the totality and that's why we're honoring the show. Obviously, music sales are a centerpiece of this, but when you look at who's gone on to Broadway, Jennifer Hudson winning an Oscar, Constantine Maroulis nominated for a Tony… It’s a juggernaut. What else can you put up against it that has that kind of track record? Just in terms of viewership, it’s bigger than All in the Family, The Cosby Show and Gunsmoke, in terms of consecutive seasons at No.1.

THR: Album sales are still down this year, but the decline has tapered off somewhat. How do you account for that?

Donio: We don't know everything that's contributing to this decline of 2.9 percent, which is pretty good. Adele has sold over a million albums, but last year, Lady Antebellum had sold more than that by this point in time and Sade as well. So it's not that there are some huge stand-out releases that have sold a lot more than the previous year. It's been consistent. Also contributing to the sales are catalog product, digital albums and vinyl. But no one has a crystal ball, so I can’t say if it's a sustained trend of whether we reached some sort of bottom. It'll be very interesting to see what happens in the next two weeks, with a mega release like Lady Gaga coming, but it’s nice to see some good news.

THR: What is biggest problem plaguing the music business right now?

Donio: There's no question that piracy is still an overarching problem because it's global. There are differences of opinion and challenges when it comes to discussions on licensing and some of the new business models, and everybody is working diligently coming from their own points of view to help grow the business, but people taking intellectual property of all shapes and sizes, not just music -- that's the big dilemma.

THR: How do you weed through so many complex models when the digital music world is changing at such an accelerated pace?

Donio: I've been saying this for a number of years and I still feel this is true: we're just going to continue to add to consumer choice. The spectrum of choices will get wider and there will be a place for physical and [digital]. There were people who said five years ago that we had seen the last CD Christmas – that labels are going to stop manufacturing compact discs. And here we are, we haven't seen that happen yet. When you look at the other options that are out there to capture a critical mass, we still haven’t gotten there yet. Will it be Spotify? Will it be Google? Apple? Is there somebody else out there with another idea that we’ll hear about tomorrow or next week or next month? Nobody knows that.

I don't think this is an either-or, silver bullet situation. The last real pivot point was when iTunes was introduced in 2003, that's now 8 years ago. We'll see what happens, but I think that there are a lot of creative ideas that hopefully will be given flight and voice to see how can consumers respond.

THR: If someone were to come to you saying, “I want to get into the music business, start a label,” what would your response be?

Donio: I do get questions like that and I say, it's not for the faint of heart. It's something you have to feel very passionately about because you've got to have a strong will, a strong constitution and good financial backing, because there's an element of risk involved that's a little different than other consumer-oriented businesses. But I would encourage people to go for it. You never know who's going to come to the table with the next artist to light a fire.

THR: What do you hope to accomplish at this year's convention?

Donio: It's the biggest we’ve had in terms of sheer numbers of speakers -- over 100. It seems like there's more to talk about. It’s about the business of ideas, but the things that develop as part of the architecture of our event don't just end at NARM, they come back. We have a board of directors. We have a digital think tank. We have a research committee. We have committees that are ongoing. And I hope we'll hear some great new music and get inspired by a new artist.

THR: NARM hasn’t been held in Los Angeles for over 20 years, what gives?

Donio: What's really interesting is that the last time NARM was here, in 1990, it was my first convention, and also the one when we introduced Mariah Carey. So we're coming back 21 years later to literally the same stage. And maybe someone will walk out onto that stage that we've never heard of before and that same magic will happen, as it did in 1990. We always hope for that.